AS WAS POINTED OUT previously in this column, half the world’s population now has total fertility rates (TFRs) below the minimum of 2.1 necessary to ensure replacement of the generations. Fertility in Eastern Europe is particularly low and several countries in this region are already experiencing population decline as a result. This has led some governments to formulate policies to encourage families to have additional children. In 2013 the government of Georgia, concerned about perceived low fertility and influenced by manifestations of the Georgian Orthodox Church about the decline of family values, created the Demographic Development Foundation. Amendments were made to the labor code to extend the duration of paid parental leave from 126 to 183 days, unpaid leave from 477 to 730 days, while birth subsidies increased from 600 to 1000 GEL. Since July of 2014, the government has also spent more than 6 million GEL on a recurrent welfare payment of 150-200 GEL per month provided to families with three or more children in regions experiencing population decline during the last 2 years.
Last year, the United Nations Population Fund (UNFPA), in collaboration with the Georgian government, prepared a Population Situation Analysis (PSA) to assess the main population issues in the country, including the need for policies aimed explicitly at stimulating fertility, rather than just easing the burden on families with children. Its results, together with those of the 2014 Population and Housing Census, suggest that not everything is as it seems.
Since the collapse of socialism in the 1990s and the social turmoil that followed it, the statistical authorities (GeoStat) have experienced considerable difficulties in keeping track of the main population trends, including the overall population size and the fertility level. The fact that the 2014 census arrived at a preliminary population estimate of only 3.73 million (excluding occupied territories) has reinforced the long-time suspicions of demographers like Prof. Giorgi Tsuladze, of Ilia State University, that the 2002 population census may have been over-enumerated, perhaps by as much as 10 per cent. Many people living abroad may have been declared as still being part of their households in Georgia, out of fear of losing certain rights that they or their families enjoyed as residents.
On the other hand, after a period of lower recorded birth rates, either real or due to problems in birth registration, there are now solid indications that the numbers in Georgia have increased since 2008. This, together with a smaller population denominator than previously thought, means that fertility in Georgia is actually not nearly as low as feared. The most recent data indicate a total fertility rate of the resident population (excluding migrants who return temporarily to Georgia to give birth) in the order of 2.0-2.1, i.e. replacement level or just below it. This makes Georgia the highest fertility country in Europe. The continuing decline of population in Georgia, particularly in the economically active ages, is not caused by a lack of babies, but by the fact that people continue to leave the country in search of better economic opportunities abroad. The numbers of emigrants have diminished since the 1990s, but GeoStat’s most recent statistics indicate that the process has not stopped.
Of course, the government may try to run a birth surplus in order to compensate for emigration, but this would be unwise. First, investments in fertility take a long time to mature, at least twenty years or so. In the short run, an increased birth rate would only increase the country’s dependency ratio, the ratio between people under 15 or over 65 and the working-age population. Secondly, sponsoring births to make up for emigration has the perverse effect of increasing the costs of the brain drain as not only the human capital endowments but the very existence of the emigrants ends up being subsidized by the state.
Migration is a way to alleviate social pressures caused by high unemployment rates, but it reinforces the country’s dependence on remittances. While remittances are reducing poverty, increasing household expenditure on consumer goods, health and education, studies such as those by Gerber and Torosyan (2010) find that a relatively small share of remitted capital is used for productive investment in Georgia. Georgian emigrants do not seem to respond to investment opportunities in the country. Melkadze (2012), for example, showed that the higher level of interest rates in Georgia compared to host countries does not result in increased remittances. Such a situation where remittances are mainly used to finance current consumption leads to a cycle of economic dependency that discourages autonomous development of sending communities.
At present, remittances are a key source of foreign earnings for Georgia, supporting the national currency and financing a significant part of the current account deficit. According to the World Bank, remittances represented 12% of GDP in 2014, the 5th highest rank among 12 reporting EECA countries, after Tajikistan (42%), Kyrgyz Republic (31%), Moldova (26%) and Armenia (19%).Such a high share of remittances is risky as a worsening of the financial situation in the host countries results in the immediate cut of money transfers. Thus, Georgia was affected significantly by the recent crises in Greece and Russia.
What Georgia needs, therefore, is not a policy to stimulate births, but an effective set of measures to reduce unemployment and increase the productivity of the labor force, to eliminate the need for Georgians to look for better opportunities abroad and maybe even convince some of those who are already living there to come back and bring international experience and new skills to the Georgian market.
RALPH HAKKERT IS A DEMOGRAPHER AND FORMER STAFF MEMBER OF UNFPA WHO NOW WORKS AS A PRIVATE CONSULTANT. HE WAS THE LEAD AUTHOR OF UNFPA’S POPULATION SITUATION ANALYSIS IN 2014.
